Alliance Group key account manager Murray Behrent said while procurement pressure may appear to be at fever pitch around the saleyards, the difference in pricing is the weight of the lambs.
Agents around Canterbury saleyards are reporting strong demand is driving prime lamb values with top prices at Temuka and Coalgate this week, fetching $194 and $198 respectively.
“Lambs are doing better after a mild autumn-winter season, coming forward earlier and heavier and what they are fetching in terms of dollars is not necessarily in line with current schedule prices,” PGG Wrightson livestock manager Joe Higgins said.
Higgins was echoed by Hazlett Livestock manager Ed Marfell.
“It’s the way the season is going; lambs are yielding well and while we are seeing good numbers come through the saleyards demand is not out of the ordinary for this time of the year, more so lamb weights are but the market is holding a cap on that,” he said.
“We are not seeing any processing company procurement pressure at all,” Marfell said.
While lamb export markets are struggling to support current schedules, there is a bit of wiggle room, AgriHQ market analyst Nicola Dennis said.
“Most companies are prepared to pay $7 a kilogram for lamb, or thereabouts, but printed schedules can be quite a bit lower than this,” she said.
“So not asking the question could make a difference of 30c/kg on the lamb cheque.”
There is almost no market for heavy lamb cuts overseas, so the only motivator is to keep lamb plants full to minimise fixed lamb costs, Dennis said.
Behrent said the kill profile this season mirrors that of last season, and growing lambs beyond 23kg is wasting grass when all processors are working to meet demand in the 19-23kg range, where the best value is for everyone.
“The price is going up, yes, but not on schedule pricing, it’s on the weight of the lambs. Take a $194 lamb weighing 35kg; it’s not $7, more like $5.50,” Behrent said.
“Prices have softened, we are seeing $6.80-$7.20 being played out in the field and at that I think we have seen the best of the schedule.”
The North Island is up 10c-20c on the South.
Behrent said there is certainly no procurement war, nor one pending.
“There is no aggressive fight for lambs, all we all want, given the ongoing uncertainty in the global market, is to keep steady and sensible, no-one is going out there paying unrealistic money,” he said.
Rabobank sustainability analyst Blake Holgate said global demand for lamb remains patchy and inconsistent with the level of market interest still highly variable.
There has been some improvement in the Chinese lamb flap pricing but not enough to offset the discounts required to move higher-value cuts in other markets.
NZ lamb supplies remain tighter than normal for this time of the season with the combined national kill up on the same time last year.
Whether this translates into any procurement pressure on prices later in the year, will depend on the degree to which processors decide to further reduce processing capacity versus lifting prices to secure supply, Holgate said.
